April 6, 2020

Regulators in New York and California have begun to press insurers on their handling of business interruption and other claims related to COVID-19.  The New York Department of Financial Services has issued a letter instructing property and casualty insurers authorized to do business in the state to provide “certain information regarding the commercial property insurance it has written in New York and details on the business interruption coverage provided in the types of policies for which it has ongoing exposure,” including an explanation of the coverage each policy offers in regard to COVID-19 losses.  The letter noted that policyholders have urgent questions about business interruption coverage, and the Department of Financial Services “considers Insurers’ obligations to policyholders a heightened priority” due to COVID-19.

California’s Department of Insurance (CDI) issued a similar notice on March 26, noting its “immediate questions” related to business interruption coverage written to California policyholders.  CDI directed insurers to provide information about the volume of business interruption, civil authority, contingent business interruption, and supply chain coverages that insurers wrote by April 9.  The insurance industry has been outspoken since the outset of the COVID-19 crisis that their business interruption and property policies typically will not provide coverage for COVID-19 claims.  The inquiries by insurance regulators in New York and California suggest otherwise.